Amazon – 2023 US E-commerce Demand Outlook & Buy with Prime Programme Launch Implications

Could you share your expectations for the e-commerce industry in the US in 2023?

In our previous Forum Interview [see Black Friday in Review – US Retail Demand Environment & E-commerce vs Bricks-and-mortar Dynamics – 30 November 2022], we discussed some figures from Adobe, which gave us an early window into holiday sales. Looking at additional iterations of other indicators released, I’m going to use Mastercard, which reported that holiday retail e-commerce sales were up about 10.6% vs 2021, while in-store sales, by contrast, were up 6.8% vs 2021. What do you make of these numbers following the Adobe release? Are these figures a sensible proxy to lean on for Q4 2022 sales results for the broad e-commerce segment? Perhaps we can also take into consideration how much of the Amazon business is processed by Mastercard vs Amex or Visa.

How much of a relatively good proxy are the numbers we’ve discussed for Amazon and what could we expect from the company’s holiday sales reporting?

Looking beyond Amazon’s top-line and sales expectations for the holiday period, let’s think about potential return rates scenarios. In the regular course of business, retailers are likely expecting a certain percentage of returns from holiday purchases. What do you find is sensible in the recent 2022 holiday period? What might be baked into those assumptions around prior holiday shopping seasons and what might this one look like?

You mentioned that for the vendors that instituted the changes to their returns policies, including the fees, that would reflect in sales. Do you think those specific vendors would potentially see higher-quality sales longer term, given they won’t be experiencing these higher returns rates or the returns rates they were seeing prior to these policies?

With the changes you mentioned and the specific vendors that are doing those, are these purely e-commerce, and it won’t extend into bricks-and-mortar?

You mentioned you didn’t notice the severe changes or significant shifts in policy happening with the majors. Do you see that happening at any point, as they maybe do it in an effort to preserve margins or grow higher-quality sales?

You mentioned retailers tightening up their returns policies. What about Amazon specifically? Do you see the platform also tightening that up?

Could you share your updated perspective on the potential impacts of a recession? We’re obviously hearing different things – some have said it might be a soft landing and some say it could be a deep recession. Looking at both scenarios, what are you thinking around the potential impacts on the e-commerce industry across categories? In our previous Interview, you mentioned that luxury apparel – and this is channel-agnostic – was proving recession- and potentially inflation-resistant. As a best case, do you still hold the same belief for that category, as resilient as it may have been?

Have fears of a recession alone impacted some behaviours in the lowest quartile of Amazon’s consumer base? Whether that’s a deep recession or a soft landing, has the thought of it shifted behaviour in any meaningful way for us to highlight?

It seems as if Amazon is exiting bricks-and-mortar for the time being, but Whole Foods is still there. Do you think the company might come back into bricks-and-mortar, when we also think of the Whole Foods component?

Do you think there are more trends to come from Amazon on the workforce reduction front?

On 10 January 2023, Amazon announced it will be expanding its Buy with Prime service to US-based merchants by the end of January 2023. Do you have any thoughts on this news or the merits and drawbacks of the launch? What’s your outlook for it?

One of the propositions with Amazon’s Buy with Prime programme is that the company is allowing these merchants to establish direct relationships with customers. Wasn’t that direct relationship with Amazon and those customers also one of the golden nuggets that it was controlling, that customer data? A lot of these merchants were forgoing access to consumer data to just have access to the Amazon channel and its customers. Why give it up now?

What could potentially go wrong with the release of Buy with Prime? It’s slated to broadly be rolled out by the end of January 2023.

What’s your updated perspective on Amazon’s positioning in soft-line goods, particularly noting some fashion industry observers have predicted a global slowdown ahead. How do you think the company is positioned for its next leg of challenges and to grow within the soft lines space?